POLITICAL financing laws are needed to prevent politicians from using foundations – better known as ‘yayasan’ – to enrich themselves, their families and political parties, said anti-graft watchdog Centre to Combat Corruption and Cronyism (C4).

In launching its report Foundation and Donations: Political Financing, Corruption, and the Pursuit of Power, political economist and member of C4’s board of directors, Edmund Gomez, said that foundations were meant to fund social and community programmes.

However, he said with little attention paid to this, unscrupulous people have taken advantage of the system to enrich themselves.

“Politicians use foundations as a conduit to obtain illicit donations and bribes from business tycoons and companies, where donations – ostensibly for the poor – were used to pay for politicians’ personal expenses or party activities,” Gomez said.

Foundations fall under the jurisdiction of two public agencies.

A foundation that functions as a non-profit organisation is monitored by the Registrar of Societies of Malaysia (RoS), or it can be registered as a company, thus governed by the Companies Commission of Malaysia (CCM).

Gomez said that there can be vulnerabilities in the system when it comes to foundations where, by nature of them being under the personal control of politicians, nepotism through family foundations as well as abuse of power can be used to circumvent rules.

“Foundations can clearly serve as a tool to furtively raise considerable funds as they are far from the view of electorate and oversight institutions such as the Electoral Commission.

“There is no legislation to ensure donations to politically-linked foundations are publicly disclosed. There is no legal requirement for foundations to publicly declare their donations to political parties or politicians.

“Current laws overseeing the financing of campaigns during elections, including party elections, pay no heed to the flow of funds from foundations, whether publicly or privately owned. 

“Also, there is no disclosure about the sponsors of these foundations and how funds are channelled by them to the parties or politicians,” he said.

According to Gomez, the current high-profile trials of leaders and the foundations linked to them provide critical insights, including employment of family-controlled foundations, abuse of power, buying political grassroots support and illicit donations.

Using the case studies of former prime minister Najib Razak and his then deputy Ahmad Zahid Hamidi, C4’s senior researcher Lalitha Kunaratnam said there were massive irregularities in some of their foundations. 

She said that family members played a key role in Najib and Zahid’s foundations.

She added that Najib and his family members held key positions in their family foundations, called the Noah Foundation and Yayasan Rahah.

Yayasan Rahah, which runs welfare and education programmes for children and the Orang Asli, was embroiled in controversy when where the Malaysian Anti-Corruption Commission (MACC) sought to seize assets worth RM270 million.

Meanwhile, Lalitha said in 2014, while Zahid was home minister, he registered a religious foundation named Yayasan Al-Falah, with his brother Mohammad Nasaee Ahmad Tarmizi as chair.

Lalitha said that during Zahid’s ongoing corruption trial, it was revealed that Zahid had paid RM5.9 million on behalf of Yayasan Al-Falah to purchase two bungalows in Country Heights, Kajang, in 2017, for religious purposes.

Also, it was also revealed that RM9.3 million was transferred out of Yayasan Akalbudi, another of Zahid’s foundations, to Yayasan Al-Falah, three weeks after Barisan Nasional lost power in the 2018 general elections.

Lalitha also said that Prime Minister Muhyiddin Yassin and opposition leader Anwar Ibrahim have foundations linked to them, which she said have political agenda within the social cause.

She said that Muhyiddin’s TSM Charity Golf Foundation had accumulated RM27 million in donations since its inception in 2003, and has channelled approximately RM24 million to charitable projects.

She said that the foundation also made food donations in the name of Bersatu Hulu Selangor and Bersatu Lembah Pantai.

Meanwhile, Yayasan Aman, founded by Anwar and helmed by his wife Dr Wan Azizah Wan Ismail, only provides aid specifically to Port Dickson and Pandan, the couple’s respective constituencies, reflecting political agenda.

Another high-profile name mentioned in the case study was Najib’s wife Rosmah Mansor and her Permata Foundation.

Lalitha, quoting the 2018 Auditor General’s Report, said that Permata was allocated a staggering RM229 million from 2016 to 2018 for operating expenses and development allocation.

She said the audit conducted on Rosmah’s foundation revealed mismanagement, poor enrolment and lack of oversight.

Gomez said that there was a real need to enforce a political financing law, of which he said both the Barisan Nasional and Pakatan Harapan governments had talked about introducing.

He said that Perikatan Nasional has been silent on this issue, with Gomez highlighting that Muhyiddin had stressed that he would tackle corruption in his inaugural speech as prime minister. – April 12, 2021.